Strategic intent


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Strategic intent

  2. 2. "A strategist’s job is to see the company not as it is . . .but as it can become." —John W. Teets, Chairman of Greyhound, Inc Strategic Intent Vision MissionPurpose the organisation strives for Business definitionLays out the framework Goals and Objectives
  3. 3. IBM-Importance of visionDuring IBM’s profitability decline in the 1990s, the company had a loss of nearly $14 billion. In 1993IBM announced a loss of $8.1 billion—the largest corporate loss of its time. This loss explains thedecision to replace its CEO at the time with Lou Gerstner in April of 1993. Some of the problemsIBM was facing when Gerstner arrived were:Bad Decisions- IBM continued to focus on the mainframe industry and ignored the emergingpersonal computer. Executives failed to realize that fast-paced computer industry, and they remainedcomplacent.Too Much Arrogance- IBM was considered unbeatable in the 1960s and 1970s. IBM believed thatits name would be enough to sell computers even when it was not positioned correctly in the market.Outsourcing to Competitors- IBM panicked when it realize that it was behind in the PC market.Instead of producing the parts of the computer itself, IBM outsourced production to Microsoft andIntel. Microsoft and Intel were small companies and could have been purchased by IBM. 25Executives were unable to correct this horrific mistake.
  4. 4. IBM-Contd….. Bad Focus- IBM was unable to pick a market in which they wanted to compete. Customers were becoming more and more fragmented, and IBM wanted to provide for everyone. However, in trying to accommodate everyone, IBM accommodated no one. High Costs- IBM was recognized as an employer for life. The founder of IBM engrained that a job with IBM was a life-long job. This idea led to high-costs because employees were never laid off, even in non-profitable times "The last thing IBM needs right now is a vision. (Before 1993) What IBM needs most right now is a vision. (March 1993)" —Louis V. Gerstner Jr., CEO, IBM Corporation
  5. 5. GERSTNER’S TURNAROUND STRATEGY FOR IBM Gerstner had the foresight to realize the importance of the mainframe due to the onslaught of corporate internetworking while competitors declared the mainframe “dead.” Manipulated the competitive direction of the company Gerstner knew that internetworking pointed to increased demand for central processing, big databases, larger storage units, and different types of servers.Gerstner succeeded in returning the computer giant to a profitable state.
  6. 6. VISION A vision statement is sometimes called a picture of your company in the future. It is the dream of what you want your company to accomplish. Many organizations today develop a vision statement that answers the question “What do we want to become?” A vision articulates the position that a firm would like to attain in the distant future. It encapsulates the basic strategic intent. “A description of something(an organisation, corporate culture, a business, a technology, an activity) in the future.” -Kotter
  7. 7. WHY SHOULD ORGANIZATIONS HAVE A“VISION” Good visions are inspiring and exhilarating. Good visions foster long term thinking. It creates a common identity and a shared sense of purpose. They are competitive, unique and simple. Good visions foster risk-taking and experimentation. They represent integrity.
  8. 8. VISION STATEMENT EXAMPLES General Motors’ vision is to be the world leader in transportation products and related services. (Good statement) Tyson Foods’ vision is to be the world’s first choice for protein solutions while maximizing shareholder value. (Good statement, unless Tyson provides nonprotein products, too specific) PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate -environment, social, economic—creating a better tomorrow than today. (Statement focuses on the concern of the company towards the community)
  9. 9. Dell’s vision is to create a company culture whereenvironmental excellence is second nature. (Statementfocuses on environmental concern of the company)Samsonite’s vision is to provide innovative solutions for thetravelling world. (Statement could have been more indicativeof the specific product it deals in or its core values or concernfor the society)Procter & Gamble’s vision is to be, and be recognized as,the best consumer products company in the world. (GoodStatement)
  10. 10. VISION STATEMENTS-ELECTRONICS INDUSTRY Channeling our energies towards the pursuit of customer value and becoming a highly profitable company. LG’s vision is to deliver innovative digital products and services that make our customers’ lives better, easier and happier through increased functionality and fun. To create exciting new digital entertainment experiences for consumers by bringing together cutting-edge products with latest generation content and services.
  11. 11. MISSION Mission is what an organization is and why it exists. “Essential purpose of the organization, concerning particularly why it is in existence, the nature of business(ess) it is in and the customers it seeks to serve and satisfy”. -Thompson(1997) Mission is the "purpose or reason for the organizations existence". -Hunger and Wheelen (1999) The mission statement articulates the company’s purpose both for those in the organizations and for the society.
  12. 12. CHARACTERISTICS OF A MISSION STATEMENT It should be feasible It should be precise It should be clear It should be motivating It should be distinctive It should include major components of strategy It should indicate how objectives are to be accomplished
  13. 13. NINE COMPONENTS1. Customers—Who are the firm’s customers?2. Products or services—What are the firm’s major products or services?3. Markets—Geographically, where does the firm compete?4. Technology—Is the firm technologically current?5. Concern for survival, growth, and profitability—Is the firm committed to growth and financial soundness?6. Philosophy—What are the basic beliefs, values, aspirations, and ethical priorities of the firm?7. Self-concept—What is the firm’s distinctive competence or major competitiveadvantage?8. Concern for public image—Is the firm responsive to social, community, andenvironmental concerns?9. Concern for employees—Are employees a valuable asset of the firm?
  14. 14. SOME MISSION STATEMENT EXAMPLES Dell’s mission is to be the most successful computer company (2) in the world at delivering the best customer experience in markets we serve (1). In doing so, Dell will meet customer expectations of highest quality; leading technology (4); competitive pricing; individual and company accountability (6); best-in-class service and support (7); flexible customization capability (7); superior corporate citizenship (8); financial stability (5). Procter & Gamble will provide branded products and services of superior quality and value (7) that improve the lives of the world’s (3) consumers. As a result, consumers (1) will reward us with industry leadership in sales, profit (5), and value creation, allowing our people (9), our shareholders, and the communities (8) in which we live and work to prosper.
  15. 15. BUSINESS DEFINITION: DEREK ABELL’S Business Definition 15
  16. 16. GOALS AND OBJECTIVES Goals denote what an organisation hopes to accomplish in a future period of time. They represent the future state or outcome of effort put in now. Objectives are the ends that state specifically how the goals shall be achieved. They are concrete and specific in contrast to goals that are generalised. 16
  17. 17. ROLE OF OBJECTIVES Objectives define the organisations relationship with its environment Objectives help an organisation pursue its vision and mission Objectives provide the basis for strategic decision-making Objectives provide the standards for performance appraisal 17
  18. 18. CHARACTERISTICS OF OBJECTIVES Objectives should be understandable Objectives should be concrete and specific Objectives should be related to a time frame Objectives should be measurable and controllable Objectives should be challenging Different objectives should correlate with each other Objectives should be set within constraints 18
  19. 19. FACTORS FOR OBJECTIVE SETTING The forces in the environment Realities of enterprise resources and internal power relationships The value system of the top executive Awareness by the management 19
  20. 20. ISSUES IN OBJECTIVE SETTING Specificity Multiplicity Periodicity Verifiability Reality Quality 20